Investor Reveals The ‘Best Shorts In History’ And The Next ‘Homerun’ | George Noble

This stock is going to get cut in half. All right. SpaceX and Tesla together are two of the best shorts at scale in the market right now. People think it's a rocket company. Let me be careful how I say this cuz I got called out the other day. People didn't get what I was meaning. It's not really a rocket company. >> You don't have to be diversified. You just have to be concentrated and right. >> Okay. Pleased to welcome back the show George Noble, managing partner of Noble Capital Advisors. Check out our last interview link down below where he's made a number of correct calls on uh where tech stocks are headed. We're going to revisit some of these calls today and get his updated outlook on the markets. Welcome back to the show, George. Good to see you. >> Thanks, Dave, for having me. Always a pleasure. >> Okay. Uh South Korean stock market imploding. Li Ashen Brener's uh fund imploded, got bought out by Citadel. Uh Japan got bought out last week or bailed out by the US Treasury. Uh and we're going to talk about what happened with earnings first. So, a lot to go over today. The bigger picture is whether or not the bubble fraud that we've been talking about for a couple months now, you and I, George, are is finally popping. Let's start with earnings right now. Space X uh arguably the hottest stock in uh in recent history. Reported revenue up 92% this year to $7.8 billion. Stock went up initially um and then came down like a rock down 11 12% on the day. I mean what do you make of the fact that you have a good ear and this is not the first time it's happened in the tech space by the way uh we can draw several examples earlier early in the year Oracle being one of them okay you have good earnings uh potentially a beat on revenue and then all of a sudden stock drops what does that tell you >> well as uh Stan Weinstein famously once said it's not the news but the reaction to news that counts a lie to that as well. Often times the first reaction is the wrong reaction. I try not to get too invested in the daily um machinations of um a lot of these hot potato stocks like SpaceX. It's funny, David. I um of late, I've only been looking at the screen three times a day. I look at the opening, I look at lunchtime, I look at the close. It's actually made me a better investor. Gives me more of a chance to focus on what's going on. Because what happens to most investors, the shiny object is the volatility and people just want to talk about, oh, what's going on with SpaceX? So, so I guess imagine David, I mean, for those viewing at home, I don't think David and I were going to do this interview yesterday, but we only realized that the SpaceX interview come out. So, it made sense. David says, "Let's do it tomorrow." I said, "Fine." Imagine though, David, if I was on with you yesterday, George, SpaceX is up 12% today. What's going on? Right. And I got to make up some nonsense. Well, you know, it's, you know, a lot of shorts being squeezed and this and that and maybe there are shorts covering their their position ahead of the earnings. Who knows? People always want to attach meaning to the day's price to the today's movement, which is a fool's errand. Today, it's down. It's more than given up. All right. So, the real story with SpaceX is how wildly overvalued it is. It is the biggest destined to become the biggest IPO flop in the history of markets. I've never seen such overvaluations at scale as SpaceX that it's designed to be a a doomed IPO is a feature, not a bug. And just to review, David, and we've talked about this twice. We were in this is the third time I've been with you in the last few months. And you rightly said to me, hey, George, you know, go with the flow. Yeah, fine. Which is why I told people when we first wrote it up, this is a pile of, you know what, but don't short it coming out the box because people are going to be squeezed into this index funds, you know, grandma's 401k, the whole thing. I said, but just wait. We waited. Stock went to like 220, wherever it went. And I wanted to first make sure all the index funds were jammed in there that buying and also um uh um it was a hot deal. You may have some, you know, tourists piling in. Keep in mind the stock open I think at 170 175 225. Today I see it's at a new low 111 and change. Um I think SpaceX is a better short now than it was at 175 where it first traded. I think it's a better short now than it was when it came public at 135. You could not have gotten shares at 135 unless you got on the deal. Why do I say that? Peter Lynch used to always say um you look at a company the story getting better or getting worse. So there's how the stock price is doing and how's the story going? Are the fundamentals getting better or getting worse? And so you could have a stock say we have David Lynn Pharmaceutical. We buy it at 10 because we think it's going to go to 15 because they have a new new drug coming out. And you know Lynn's a pretty aggressive CEO. He promotes her stock. Um I I seen they were called Biovail was a Canadian company too. So I know a bunch of Canadians but anyway so Lyn Pharmaceutical they come out with their product and um stock goes up and so say we thought it was going to go to 15 and now it's at 13. You'd be like well George you want to buy it at 10 it's now 15. It's 50% upside. Now it's 13. It's only two points upside 15% upside. I said yeah but wait a second when Lynn first mentioned the product we thought the addressable market was going to be x number of x millions of people. Well, now there are more applications and all of a sudden, you know, uh say it was say say it was Viagra. Okay, Viagra to remind folks was originally designed was for pulmonary uh conditions. Well, then we discovered along the way it was good for erectile dysfunction. So all of a sudden the addressable market for Viagra goes crazy. So people result on price. They look at the price in the screen. But maybe Lynn is telling us now that you know what we thought the addressable market for this farmer farmer product they're coming out is is 100 million people. Now it's 500 million people. So the stock could be a better buy at 13 than it was at 10 because we now think it's going to go to 40 instead of going to 15. How's that relevant to SpaceX? The squeeze is out of the way. The index inclusion uh they made it, you know, a very tight float. So some of the institutions that want to top up their positions, etc., etc. Fine. They're all in now. And now, and I'm so glad we're doing this today, David. I know you know this, but just to review the bidding, tomorrow, guess what? Tomorrow, the float on SpaceX goes from 5% to 25%. So, there were 85 million shares at issue, um I believe there's um 911 million shares that are going to be um eligible for sale tomorrow. And when you consider, David, of the 85 million shares that were issued, a goodly proportion of those were taken up, index funds bought them. some big institutions bought them. So if you said to yourself, how many shares are held by discretionary investors, retail investors, it's I don't know 20 30 million maybe. Who really knows? That's not the point. Point is that should be compared to the 911 million shares that be unlocked tomorrow. Now is SpaceX going to collapse tomorrow? I have no idea. It could be up tomorrow for all I know. For all I know, it could be up. You know why? Cuz all the wise guys are shorting the stock ahead of time. Suggestions 30% of the float is now short. Probably true. So maybe it goes up, but that's not the point, David, as opposed to many. I'm not interested in speculating. We're investing. All right. So when I call pay as a short at 145 and I said it's I say it's worth 30, this stock, in my opinion, you can quote me on this. Okay? This stock is going to get cut in half. All right? Maybe by as soon as the year end. So what it does next week, I don't know. But if I tell you with high confidence in my opinion, do your own work. Direction travel is down. Southerntherly direction from upper left to lower right. Being concerned with what it's doing tomorrow, what it's doing today doesn't interest me. I'm an investor. I think SpaceX and Tesla together are two of the best shorts at scale in the market right now. Two of the best shorts in the history of capital markets. I'm short Tesla from one from 475. I'm short Tesla SpaceX from 145. People may not want to hear this. I'm interested though not making feel good. I'm interested in helping them make money in what I believe to be the truth. Before we continue with the video, I'd like to tell you about a new opportunity to be exposed to gold and silver. Today's sponsor, ICG Silver and Gold, is one of Nevada's newest silver and gold exploration companies, having gone public earlier this year. Their flagship project is in the Tuscorura district, a district scale silver and gold project sitting at the intersection of two of Nevada's best known gold belts, the Carlin trend and the Independence Trend. With both open pit and underground potential, the project sits only a few kilometers away from First Majestics Jarrett Canyon Mine, which is on track to restart production next year. The Tuscarora district is an advanced exploration asset. There's more than 40,000 meters of historic drilling on the project, including a past intercept of 4.57 meters of 127 g per ton gold and 1.5 m of 367 g per ton silver and 52 g per ton gold. The company is now drilling 3,000 m at the first 10 targets and is aiming to release the project's first inferred mineral resource in the first quarter of 2027. To learn more about the project and the company, check out the link in the description down below. And as always, review the company's filings and risk disclosures before making any investment decisions. Okay, I'm going to read you a paragraph of this uh article here and then I'll ask my question. SpaceX hit by surging AI costs. Okay, so for a rocket company, SpaceX is spending a lot of money to build out its AI capacities. Too much according to investors. The company reported revenue in its first quarterly update as a public company that surpassed analyst expectations. I mentioned that earlier. But the stock went down George because most of its revenue came from Starling satellite offering and uh investors turned to capital expenditures related to its XAI unit which runs the Gro AI service. Those hit 15.8 billion higher than expectations of 13.9 billion. My question 13.09 billion. question is maybe now this is evidence of perhaps the market froth going away and hype going away because a few years ago if you had told me that the markets would react to capex spending rather than just hope I would say that's crazy right this part of the market is bought byium and investors buy it because they expect SpaceX to one day be bigger than Earth or the case of Tesla one day Tesla will be something greater than Ford uh even though they never made as much money as the American car companies. Anyway, my point is Tesla lost money for many years. Stocks still went up. Nobody really cared fundamentally about costs, I guess, until now. Right. Back to fundamentals, are we? >> I believe so. Um, but again, to try to attach approximate call, you know, reason the stock's up or down a given day. Don't really know what you think makes sense. They're looking at a prodigious cash burn. As you know, they issued bonds few weeks ago. I don't think that's on what's on what SpaceX is doing. Okay. There's no profitability in sight. This is a public publicly traded science experiment. People think it's a rocket company. Let me be careful how I say this because I got called out the other day. People didn't get what I was meaning. It's not really a rocket company. really an AI company. If you look at their they suggested a 29 billion trillion dollar TAM when they came public threearters of that is from AI. So the real driver here they were the cash burn and everything is from the AI side of things. Okay, it's nice to talk about Starlink. It's nice to talk about the rocket business but that's not what's really going to move the needle here either in a positive or negative direction. So it's really an I AI play with star and they say well you know it's the integration George you don't get it you have to merge the rockets with the Starlink with the AI and it's the only integrated you know blah blah blah it's a cash burning AI play all right and and sort of the mannequin in the window which attracts attention oh the rockets are cool look at this Elon's done things for humanity nobody else has done yeah he's lost so much freaking money as well it's the whole thing is is is is fanciful right He's he's he's capitalizing on what I would call low information investors who aren't looking at the numbers, aren't looking at the valuation. All right. And now, as you rightly point out, David, I mean, listen, this is this company's got what is it still like a trillion for market cap and the revenues are like, you know, David, whether they whether they made or lost two billion, four billion, six billion, eight, who cares? This is a company. All right. Did $7.8 billion in the most recent quarter. Oh, it's a peak. They beat by 980 million. David, annualize that. It's 32 billion. The market value has 1.4 trillion. Like, in what world does that make any sense? So, everyone's going on about this, about that. But, you're right on the cash burn because they keep spending money like cash. They're going to need more cash. They're going to have to come to the market, issue more bonds, maybe sell stock. So, this is this was an IPO just built to fail. Built to fail. And I called it out. We wrote a piece on April 29th. It was on X. Got 1.7 million impressions. It was the axe. The axe on on the piece. We laid it all out and some of the parts I want to remind folks that well you want danger said no I don't. No I I don't. And anyone who says that to me when they start with the insults that helmet attacks that's a cover for the fact they can't defend their position. So we go through the numbers and you okay Starlink good business worth a couple hundred billion whatever. You then look at the rocket business. Um, you look at the the AI thing, you come up with like, I don't know, $400 billion, maybe 300, 400, whatever, some number like that. Maybe it's 500 if you're in a good mood, 200 if you're in a bad mood. So, let's take 400 billion. All right, 500 billion. You come up with 25, $30 a share. And whether whether the revenue quarterly revenue came in at 7.8 billion or 8.8 billion or 5.8 billion, doesn't matter. Then you have people like Gene Monster. I'm going to call him out. Nice guy. He's had a lot of great picks over the years, but look at the analytical malpractice he's engaging in. All right, just to gain eyeballs. The guy must have posted 15 tweets on X yesterday. It'd be like me saying like, well, you know, I actually think the outlook for uh SpaceX, you they're going to use blue colored rockets instead of yellow colored rockets. Like, does anybody really care about that? No. The bottom line is liars figure, figures don't lie. 1.4 4 trillion accelerating cash burn$ 32 billion in revenues and now the float is going up by 5x tomorrow and it's going to go to 50 100% over the ensuing months saying 7% incremental unlocks over the next few months. Think about it David anybody who bought stock on a private basis in space $10 a share $20 $30 a share they all know it's overvalued and now you have a chance to sell at $110. So, like what do you think's going to happen to the price of the stock? And then on top of it, wait, there's more. This there's no valuation support. The chart's broken. So, all the all the FOMO, guys, it's like, wait a second, you know, and I'm going to tell you this last day. You're I don't know if you're single, married, whatever. Tell you a funny story. You're going to love this one. So, I became uh available, shall they say, in the last few months. I broke up with a wonderful woman. Um, sad it ended. So, I'm back on dating. Okay. I'm on Bumble. All right, Dave, maybe you can introduce me to some nice nice ladies. Okay, I'm on Bumble. I can't tell you. I probably went on, I don't know, two or three dates. I've been on like 46 dates, okay? 46 different women. Two or three dates. I had these chicks asking me about SpaceX. I'm trying to sweet talk them and they want to know about SpaceX. Tell me outside of Mania. Anyway, this is this is you heard it here first. Been on your show twice. I'm saying it again. Lest you think you missed something. Well, you know, George had to short it, but I didn't short it. It was a 1045 one. This sucker is going down. >> All right. Tell us about how to use leverage responsibly if there is such a thing because apparently that's the issue here with situation to awareness uh meltdown. It's not. Okay. So, people are arguing here about what actually caused Leopold Ashen Brener's fund, $45 billion fund to basically go into a fire cell couple weeks ago. Citadel bought out most of its shares. Okay. So, what happened here? According to the Bank of America CEO Brian uh Moyahan, he called this a near collapse uh of the hedge fund an issue of leverage, right? These are all warning shots. Moan told CNBC's Ross uh Andrew Ross Sorcin valuations get out leverage in the system gets there. You have to be careful. And then I was just reading a business insider had a separate article about what went wrong here. They've offered some theories as author. So he had too many eggs in too few baskets. Okay, that we know that. But it basically it says here, "You could be right on your thesis, but still wrong on execution." Where's that paragraph? Yeah, here. It's entirely possible Ashton Brener's overall investment thesis was right. After all, his original paper predicted many ongoing trends, but he ran into an unfortunate reality of high conviction investing. You can be right and still lose. Have you ever encountered that in your experience? Being right and still lose. Yeah, but um as George Thor famously once said, I'm going to bastardize the quote, but it wasn't so much I think St. Ducker Miller said this as well. It's not necessarily what your batting average is. It's when you're right, how much do you make? And when you're wrong, how much do you lose? And there are great investors. I'm going to site Brian uh Bruce Cobner as one who um fantastic investor, one of the best of all time. He was a come on, he's trading guy and um he would tell you that most of the time he was wrong. However, he was a trend following guy. You you would you would understand this David readily most of us would understand this. When he was wrong, he cut it immediately. There was no emotional attachment to what he was doing. And you'd also you size a position in a way where you have to count against the idea that something could go horribly wrong. So you limit your losses. Flip side is when you're right, if you're trend following, you keep you keep following the trend, following the trend, following the stop loss. And the minute it goes the wrong way, you're out. So it's not necessarily whether you're right 60% of the time, 40% of the time. And Cotor would say I think he was wrong. He was only right 30% of the time, but when he got it, he really got it. his slug to use a baseball analogy, David, his slugging percentage was enormous. So, in the case of what is it called? The situationally unaware fund. Um, I am appalled. We've seen this movie before. Um, this is absolutely outrageous. Um, I don't know Mr. Ashen Brener. Um, I will just say that some of his past affiliations were a bit questionable to put it mildly. I think he was at uh scam bankman frauds thing for a while and then he was at another place. I mean >> he was an open AI. He was he was okay. So okay. Okay. Now he has to be a smart guy. You don't get to be a valadictorian at Colombia and graduate at the age of 19. So 10 times smarter than I am. That's not the point. But clearly the guy knows nothing about risk management. Clearly by dent of you say you can judge a man by his friends. Well look at his his former colleagues. That's not a crowd you were all having anything to do with. All right. So, bright guy. Maybe he totally knew what he was doing. Maybe he didn't. I don't know. But the but the one I really have trouble the thing I really have trouble. The real message of the story here is who gave him the money. And you look at some of the investors who invested in him. This is not new. Where were the adults in the room? Okay. The and this is this is actually a really important I'm really glad you asked this question, David. This is symptomatic what's going on in the market right now that you have a 24 year old kid and look I wish I was young too. I got gray hair. All right. I'm not I'm not bismerching youth but like at 24 like what the hell do you know? What did you know at 24? What did I know at 24? All right. And that he was given this much money to manage and then you got the prime brokers who are extending all the leverage to him. Like come on. Now were there any laws broken here? No. But there was a ton of bad judgment. Ton of bad judgment from Goldman Sachs and Morgan Stanley and the rest enabling all this. They're just after the fees. They're in for the money. Ton of bad judgment on the part of Mr. Ashton Brener. Ton of bad judgment on the part of his investors. And he is not the reason. Now we're going to generalize. We're going to zoom out. Yeah. People say, "Well, you know, the whole reason now we know why tech stocks blew up. It's because Mr. Ashen Brener." Well, wait a second. So, you're all complaining. You said, "Oh, it's a one-off. Now we know why it happened. It's all good now. He puked. It's all good. We can go back in." I sent you a chart this morning, which showed the the options being purchased again. Right. >> Hey, David. Hey, David. Do you think some of the buying from Mr. Ashen Brener and folks like him maybe had a little bit to do with why it went up. So, they weren't complaining when it went up. Now, you got to complain when it goes down. The point is The point is he got rinsed. He got He's out of he's out of business. I mean, he's got David, think about this for a second. If you back out his anthropic stake, he's basically a zero. He's a zero. He lost probably more than 100% on his publicly traded equities. He was up whatever it was, 400 some odd percent at one point. All right. The only asset he's got left is anthropic. So, he's probably more than 100% loss on his publicly traded equities. So, to me, it's symptomatic just how d I'll stop dangerous the situation is. And if you think Leon Ashenberger is the only guy who recklessly speculated, David, you highlighted the last time we were on. So, I think one in 30 adult Koreans got margin called or whatever. >> Everyone was doing he's just the most high-profile example of who got caught. That's all. >> Okay, look, everyone at some point loses money. What happened here was apparently he was up 439% hailed as an AI genius in the investment world. Then apparently 4x leverage wiped out 67% of his fund in one month. Fire cell happened. Citadel stepped in, bought it out. Okay, how do we manage risk is my question because in theory, had he managed his positions properly, and I use the word properly subjectively because that, you know, that could vary depending on who you're talking to, uh this wouldn't have happened. He would have suffered some losses, paper losses, had he not sold, but he wouldn't have had a fireell. He wouldn't have gotten margin call in some positions. All right. Walk us through how you would have done this. >> Right. Okay. And by the way, his fund was actually more than four times leveraged the way I look at it because he had this big anthropic holding. So if he had 10 billion in equity and 35 billion in debt, whatever it was, he was le so he had a huge portfolio publicly traded equities. So the the leverage just on the publicly traded part was even bigger. But but I digress. You have to you have to investors typically use I know you're familiar with this David Var model value at risk. So you say to yourself, okay, what's the implied volatility of this portfolio? What can I reasonly expect it to go up or down? And then you know if it goes down the max amount I think it could in one day what the computer says how much would I lose? Okay, he clearly was not using a VAR model. All right, it's always number go up. Yeah, upside volatility fine but they never think downside volatility can can manifest. All right, so how would I have managed it? I mean being man being levered four times X on these on this garbage which probably has a beta of one and a half or two you six or eight times notional on the stock market it's crazy no institutional investor does that at least the way he does it you there are people with pair trades that do it but to be naked long and he tried shorting some stuff to hedge himself out so how would I have done it you want to use leverage no responsible hedge fund guy I know in cash equity would ever be four times levered on high octane stuff. Okay, if I was the risk manager of that fund or any responsible risk manager, you want to lose some leverage, maybe you'd be 150% levered, 200% levered, whatever. Okay, but then here's the real part and we use this phrase last time we were together, David, I said to you, little I know Mr. Ashenberger was going to reveal himself. Whenever you see debt and hubris, run don't walk. We had copious amounts of both in this particular case. The market humbles all of us. For people who are going to throw stones at me, I'm telling you, I have made so many bad mistakes in my career. This is not about being right all the time. This is about being right more than you're wrong. And when you're wrong, make sure you don't get carried out. Okay? Mr. Ashenburgger and his colleagues had no concept of risk management. The investors who invested with them were blind to the whole thing. The brokers, you know, they they leveraged. They got in there. And then last point I'll make on this. People say, "Oh, Ken Griffin Cit brought him down." No, they didn't. This is another widely debunked claim by idiot furu investors who've only been investing since since since co in the last 5 years. Oh, Ken Griffin was calling for a rate hike and and then once once it crashed, he then swooped in. Nonsense. That's not how this works. How this works is Leon Ashenberger had no business doing what he did. And last thing I'll say on this, this history is replete with numerous examples like this. I'd like to draw your attention, David, to everyone should look up online and you may want to pull it up. Ryan Jacob. Ryan Jacob of Jacob Asset Management. Okay, I remember like it was yesterday. The guy was up like 200% in 1999. Not as much as Leon because he wasn't as much leverage as Leon, but he was up 200% pulling the same stunt. Okay. And the fund only went down like 99%. So there's nothing new here. There's nothing new. What's new is we don't have enough investors with gray hair who've seen this before who are aware where this can happen. And oh by the way, and what do we do now? I believe there's still a lot of people who uh are in this trade. And it's not just a graph I sent you. There's one the other day which showed record amounts of buying and selling at conductors. All right, in tech. All right, if you want to be bullish on tech, I could be wrong on tech. You don't want to see this. Buy when there's blood in the streets, nonsense. Right now they're doing it again. I I put something next day a wise guy correct buy when there's blood in the streets. Baron Rothchild, please call your office. No. Sell when there's champagne in the streets. And that's what we're seeing right now. All right. They think everything's fine now. It's not fine. Go back to our last interview. You know, we talked about rising bond yields. Michael H, please call your office. Decreasing excess liquidity calling to into into question the economics of the AI trade. Token prices dropping. What's happening to capex? So Leon Ashenberger is just he he's he's a bug that hit the windshield. He was not the problem. Okay, my own personal view. I mean, life is not linear. Things don't go straight up. They don't go straight down. We're rallying right now. How far this rally goes, I don't know. But I think the whole the reasons being bearish on tech still apply. >> Okay. Uh and just be clear, I'm not trying to pick on Leo here. We're just using this as a is sort of a case study on uh investing. Evaluate the next statement, please. Okay. I've heard this a lot when I was younger. I'm hearing it now. I think this sums up the philosophy here. You don't have to be diversified. You just have to be concentrated and right. >> Okay. Stanley Duck Miller and Stan, I hope you're watching this. I'm going to call you out. You are the goat. The two investors I hold in highest esteem anywhere are Stanley Duck Miller and Peter Lynch. They do things differently. Okay. Stan would always talk about you can put your all eggs in one basket, but you got to watch the basket really closely. You got to know what you're doing. Not everybody can be Stanley Ducker Miller. Everyone wants to be Michael Jordan. We can't all be Michael Jordan. There's only one Stan Ducker Miller. So, you have this superficial knowledge. Oh, I'm going to be Stanley Ducker. Hey, watch this. Doesn't work that way. I try to do it. Doesn't work. Okay. We're mere mortals. All right. So this the the philosophy you just espoused that you just repeated again I think it's probably largely embraced by people who are not knowledgeable about financial history and again I wish I was young. This is not what this is about. This is I'm against financial ignorance. I urge everyone to go back and read extraordinary delusions of the madness of crowds which chronicles the great mania throughout history. Dutch tul of bulmania south sea bubble etc etc or go read Jesse Livermore reminiscence of a stock operator okay and read about what the speculations were like in the roaring 20s so yes I agree in principle with that statement but it's easier said than done and history is full of examples where this ended disastrously for people last I'll say in that regard markets have a way of attacking crowded positions so witness Mr. Mr. Ashenberger, when you know there's a whale that's stuck and the market starts to get winded that the whale's wounded, it will attack. It will short those positions. All right? So, being concentrated and trust me, I've done this before. I've done it with great success. I've done it and I really ran into a wall. Easier said than done. Not everyone can be Stan. >> Thank you. Let's move on to markets now. Uh, not everybody can be Stan. Not everybody can regrite all the time. Um, before I talk about this chart, then just follow up. What would you consider a diversified portfolio? See, in business school, the textbook says 40 stocks. I don't know. I I can't remember how they got to that number. Uh, there was some math behind it. Anyway, people are different. Everyone's got a different philosophy here. What is a diversified portfolio to you? >> I think it depends on who you're talking about. For an individual, 20 stocks. Um because let's keep in mind David there's also the issue of like how many things can do you actually follow carefully. It's one thing if you're an institution you got a team of analysts. Yeah you could have 30 40 50 100 stocks but it's also point you reach the point Peter famously would talk about diversification not diversification diversification. I had know you have too many names. I had one fellow who worked for me um he'll remain nameless. He's in the federal witness protection program. He's a good investor, but he always had too many names. So what would happen? He's come with a great idea. He only put 1% in it and it goes to 50%. He made 50 basis points. Great. So he he would he would make it to the point he could never could generate good performance because he had too many names. Similarly, Peter Peter Lynch and I'm sorry I keep mentioning him, but you know, and for all you clowns that want to throw stones at me, you know what? I was very lucky to be have him as a teacher. I'm just trying to pass on to you what I learned from him. People say, well, you know, he had 800 names. like how could he do that? Well, what they often overlook was he might have 10 names, 20 names that account for 40% of the portfolio. >> Yeah. >> So, the the top names were were doing all the heavy lifting for him. And the other ones much smaller, a lot of little positions. Tell one funny story. He had a lot of little positions. I remember there was one one week went on vacation and uh my a friend of mine uh Dan Frank um and I we were we were uh we were put in charge of the portfolio and we were just caretakers. We weren't supposed to do anything. If something came up we'd call Peter but whatever I could sit in Peter's chair for a week, right? So it was like he's got these 800 positions. It's a great story. So it would be like Danny and I'd be like wait a second he's got a thousand shares of that, 10,000 shares. What is this? So we get rid of like all these little things, right? Thinking he wouldn't notice them. comes back. He's like, "George, why did you sell XYZ?" You know, he bought him right back. All right. So, the point about diversification, you know, Peter uses his starter positions just because if you're thinking about buying SpaceX or shorting SpaceX, have 100 shares in the portfolio, long or short, and I trust you, trust me, when it's on your screen, and this happens to all of us. If I was long, if I was thinking of buying SpaceX and I bought 100 shares, it could be like the tiniest position in my portfolio. But I promise you if it's going down that's the position I'm going to be looking at. So to come back to the diversation question I think individual investor as you only can follow so many stocks at once. So it's 20 stocks 30 stocks that's fine. Institutions it could be a 100 stocks. Um there's one successful firm that I knew that in Boston they had a discipline. They limited themselves to 30 stocks because they didn't want to overly diversify. So say David, you're the analyst at this firm. You come along with an idea. >> Yeah. >> You got to pitch the idea. You want to put that idea in. Well, one's got to come out. So that kept the fund focused on their best 30 ideas. So that would be like roughly their evil weighted 3% position. So you know for an individual 20 30 names for institution it could be 50 100 names. Um if you're Stan Ducker Miller it might be five names. >> All right let's get into the uh let's finish off on your uh the names that you like. You don't have to name specific names but what do you like right now? I'll share this post with you uh with the audience here. This is something you posted on X. Sell when there's champagne in the streets. There, I fixed it. You're referring to the zero hedge uh tweet. There's your epic buying panic blow off top. Yesterday over 4 million S&P calls call options were bought. The highest level ever recorded. Wow. Uh there's a bullish indicator if ever I saw one. Unless I'm wrong on that. Um >> well well hold on. >> Let's comment on this. >> Yeah. Yeah. So, so it's bullish in so far as the public's voting with their feet. The public's wildly bullish now because we had the correction and we're having the 14th truce and the whole reason tech went down was cuz Leon Ashen Bren was forced to sell. Now he's out. So, we're all good. We're all good. Forget about the fact bond yields are rising. Forget about the fact inflation is sticky. Forget about the fact there's no truce in sight for the straight silver moves. Forget about the st fact that token prices go down every day. Forget about the fact that the CDS spreads, the credit spreads and CDS go up on the AI guys every day. So the wheels are coming off the AI trade. I said to you last time and I still stick to it. This is going to be, in my opinion, the biggest misallocation of capital in history. We can get into this model, that model, but you know, you've got price cuts. Um, East one's my price is lower in yours, Dave. Then on top, look across the streets. Chinese are 95% off and and their models are good enough for 90% of what you need to do. So, we only need to use the the the the Frontier models for a small percentage of it and blah blah blah blah blah. Okay. I think semiconductor stocks are a fabulous short. I like them. I'm not sure I did this last time. I don't think I did. To me, they're shipping stocks. They trade like shipping stocks. You sell them when the pees are and the profits are high and the pees are low and you buy them when the profitability is low and the pees are very high. I'm I'm I'm in shipping. I actually like shipping. We'll get I'll morph into what what I like. Um I put out a piece yesterday on Starbucks. It's on my um paid Substack. Uh for those of you interested, I have 80% of what I do is for free. It's on Substack. I'm also on X. I also have a paid Substack. Not to mention the conferences, David, which you're well aware. Um and and and when it comes to shipping, as you can imagine, the tankers are going crazy right now because >> you know, you can't run the vessels through the straits of Hormuz and therefore the t miles are way up and so the demand for shipping is way up. So the rates are way up and so like you know a couple of shipping stocks are like Okinus the the tanker guy out of Norway. They trade totally on spot. You know, David, this stock's like 60 bucks a share. OE, pull this up for a second. Pull this up. OE. All right. It's a really wellown company. It's Norwegian. It's listed on the New York Stock Exchange. All right. I think they just printed $6.25, $6 plus or minus yesterday in earnings. All right. You annualize that. And they're telling you, by the way, the next quarter is going to be even higher. But just annualize that quarter. That's $24 earnings. The stock is at 60. It's at two and a half times earnings. The dividend yields, I don't know, 30% or some crazy number like that because they're paying all the income in terms of dividends. Well, there's a reason the stock trades where it does, only two and a half times earnings. Because anyone who knows shipping knows these day rates are unsustainable. It's a commodity capital intensive commodity business where if the if the if if the Greek and Norwegian ship owners, those are the main guys in shipping, decide, oh, the outlooks look pretty good, they're going to order more vessels. So, these excess returns are going to be arbitrageed away. It's only a question of time. This may go on for a year, two years, five years. We really don't know that the vessel that the the the day rates will go down and the shipping the shipping values will go down. So no one values the shipping stock on PE. It's it's insane. You get thrown out of your direct refinance class every day. Instead you look at book value, net asset value um and you try to do a discount of cash flow as well. But what the semiconductor guys are doing they're saying this is normal like this is going to continue. No it's not. No it's not. Look at the big increase in revenues you're seeing for a lot of these guys. It's more price than volume. They're jacking prices. It's a shortage. You're seeing already, David. You tell me. You read this stuff. I watch you every day. And everyone watching the show should watch, David, every day. Chinese are increasing capex like crazy on semiconductors. You had that IPO that just came out recently, that whatever CMXT thing, whatever the hell it is. Okay, the the orders are there. This is when you're supposed to sell these stocks. You sell when the order books get full. All right? And so that's the big mistake I think that investors are making with semiconductor stocks, the hyperscalers. And by the way, last point on this, I know I talked too much, but if you're a vessel, here's another point. >> You're a vessel owner, if you if you have David Lynn Shipping, and the guy's reckless. He just loves bull markets, can't afford to miss the party, and he goes and he pays top dollar for new for new vessels because you think trees are going to go to the sky. So he pays up, the new bill prices are up 30% because the Koreans are are screwing. He wants a vessel. Well, guess what? When David gets delivery of those vessels, he is now the high cost operator because he's stuck with these vessels he bought at a very high price. All the other guys bought them at much lower prices. Okay? So, you're you're running these data centers and all this stuff. You're paying up for this. I'm telling you, the in my opinion, the value destruction is going to be absolutely epic. So, what do I like? I actually do like shipping, particularly bulk. Um I like energy. Energy is up 30% year to date, if not more, despite the pullback we had. Um, I've been very public about the names that I like. Um, you know, you don't have to be a rocket scientist. Just buy energy. Energy is still only 3% of the S&P. It's less than half the market weight index waiting of Apple or Nvidia. >> I like gold gold and gold miners, um, short short bonds. >> So, still reflation broadly defined. >> All right, that was uh, perfect. That summed up my uh, next question. What you like? You already talked about what you don't like. My final question to you based on the things you like some of the commodities, gold miners, gold, etc. Aren't you concerned about rising interest rates, the yield curve steepening uh pushing those trades uh south? >> Yes. Answer is yes. Okay. Okay. So, um I I think um I have longs and I have shorts. >> What I believe more strongly than where the index is say, well, is the S&P going up? I don't know. What I do know is I think semiconductor stocks are going to crash. I think tech which you know keep in mind my by not just technology defines 40% of the index but you take like you know Amazon which is in consumer discretionary and Netflix which is in communications those are really tech stocks you know they trade with tech you take caterpillar I know you talked about in the show the other day with Dave Nikkowski you take Caterpillar now it's trading like a tech stock right it's trading with AI trade so you've got maybe 60% of the market that's trading with the tech trade and what I really believe is if you own financials energy healthcare the hodgepodge of other stuff, and you're short this tech stuff, I think you're going to kill it. All right. Now, we get a we get a big tech fallout and I urge everyone, you know, I had Ed Zitron and Julian Garren and Nobody Special last week. Urge everyone to go watch that video. The best the best AI discussion in the history of the world. Chimath all podcast. Bring it. the the technology IQ of my panel, it's not me, the technology IQ of my panel runs rings around you guys. It's a fact, not an opinion. All right. Um, and you know, the tech trade comes really unstuck. I think the economic fall out of that is going to be ginormous. Probably bring on a recession. Recession is not my call right now. Um, so yeah, there's risk. So I I really believe I think energy for the for the next 5 10 years is going to be a home run trade. Copper gold. Um so I'd hedge it by shorting SpaceX and Tesla and Cororeweave and and the Neoclouds and all the other garbage I can't stand and selected consumer stocks. So it's really the index I don't know because I can't tell you how it's going and you know to be fair Dave Mosski said it better than I ever could. Market's broadening, breath is great. What's not to like? But so looking at the index again, Peter Lynch, please call your office. It's a market of stocks. All right. So know what you own. All right. Run, don't walk from tech stocks. >> Thank you, George. Appreciate your update as always. Tell us where we can follow you. And uh you mentioned your summit as well. Do we have another one coming up? >> Not yet. We'll have one in the fall. But if you want to know more of what I'm up to, go to uh my substack, the Noble Update. Uh a lot of good free stuff there. Be grateful if you support us. We have a Substack. can subscribe. We also have a p we have we have a podcast summary product which is great. We give you for $99 a year. All right. You're getting 40 podcasts a month summarized in 40 minutes. Huge timesaver. Keeps you up on what's important. So I'm on Substack. I'm on um uh X um and you know I'm trying to help people with investor education. Yes, I know I have strong views and I know I'm wrong a lot of the time. Market teaches us all humility. But I remind folks, we're in a business where if you're right 60% of the time, it's a great result. And I'm usually able to live up to that. I spectacularly failed a few years ago. I had a horrible ETF. >> You learn. >> Yeah. >> Move on. >> Yeah. So, the noble ETF. Uh we we can talk about some of the lessons uh you've uh you know, you've learned over your career, but I appreciate you sharing your wisdom with us, George. Thank you so much. We'll put the links down below. Make sure to follow George there. And we'll have George on again soon. Take care for now, George.